MANILA

Bunye: The bell ringers at PDEX

Speaking Out

IT WAS an auspicious day recently at the Philippine Dealing and Exchange Corporation (PDEX).

Bank of the Philippine Islands became the 30th issuer at PDEX this year with its issue of a P3-billion Long Term Negotiable Certificate of Deposit (LTNCD). Antonino A. Nakpil, president and COO of PDEX, said that BPI's issue broke PDEX's record last year of 29 listings and brought the issuances in the organized market this year to over P298 billion.

Total outstanding issues at the PDEX now stand at P1.27 trillion. Around this time last year, a P25 billion issued by BPI helped PDEX breach the P1 trillion mark for the very first time.

LTNCDs are like regular time deposits that offer higher interest rates but cannot be pre-terminated by holders. However, the notes can be traded in the secondary market prior to maturity, making them "negotiable." Like regular bank deposits, LTNCDs are insured by the PDIC up to P500,000.

Cezar P. Consing, BPI president and CEO, described BPI's latest appearance at the PDEX podium "as part and parcel of a financing program that began over two years ago." He credited BPI Treasurer Antonio Paner and BPI CFO Ma. Theresa Javier for putting the program together.

It began last year, Consing said, with BPI raising P50 billion pesos via a stock rights offering, followed by two fairly large issues of US dollar 600 million and P25 billion, respectively.

The buildup was followed this year by a 100 million Swiss Franc offering in the retail markets that was unique. It was the first negative yielding offering by a Philippine (even by any South East Asian) borrower.

Just five days later came a 400 million US dollar offering in the international capital markets which was likewise unique, it being the lowest-priced issue by a Philippine borrower.

Consing said all the above moves are indicative of BPI's objective of "growing in step with our country."

"We started by raising equity, lowering the leverage of the bank, and then adjusting the leverage of the bank further up, by doing this succession of 5 financings in various markets.

"Of course, we did all these at a time of low interest rates, but wecan not assume that low interest rates will be there forever.

"What we are assuming, though, is the country will grow at a pace that probably exceeds most other areas of the world. And growth brings benefits which we have to take advantage of," Consing explained. "Growth makes the country more leverageable and makes our balance sheet more open to taking on more liabilities."

Hong Kong and Shanghai Banking Corp. Ltd. acted as the sole arranger and participating selling agent of the deal, while BPI Capital Corp. acted as the sole selling agent for the LTNCDs.

Nakpil, meanwhile, lauded the Securities and Exchange Commission (SEC) for its "development-enabling regulatory stance for the fixed income market."

SEC has formally approved additional guidelines for the listing and enrolment of bonds issued under the bank issuance program. In addition, the SEC also approved the trading and settlement guidelines for floating rate bonds, paving the way for the listing/trading of this type of bonds, adding an alternative funding and investment structure for issuers and investors, respectively.

The Bangko Sentral ng Pilipinas (BSP), for its part, recently lowered the reserve requirement ratio for bank-issued bonds from 6 to 3 percent.

Consing rang the ceremonial bell, signaling the start of the trading of the LTNCD. Aside from Nakpil, the following were also around to witness the milestone event:

PDS Group President Ma. Theresa Ravalo, BPI Treasurer and Global Markets Head Antonio Paner, The Hong Kong and Shanghai Banking Corporation Limited (HSBC) President & CEO Graham Fitzgerald, BPI Capital Corporation President Rhoda Huang, BPI Corporate Banking Head Juan Carlos L. Syquia, BPI Head -- Asset and Liability, Global Markets Dino Gasmen, BPI Family Bank President Ma. Cristina "Ginbee" Go, HSBC Head of Debt Capital Markets Corrie D. Purisima and this writer, an Independent Director of BPI.

PDEX top issuers

The Ayala Group -- of which BPI is a part -- was the pioneer issuer at the PDEX. Ayala Corporation and Ayala Land started the ball rolling eleven years ago with a total issue of P10 billion.

As of November 2019, total issues amount to P1.27 trillion. The three biggest conglomerate issuers are: 1. SM Group -- accounting for 21.72 percent; 2. San Miguel Group -- with 17.31 percent; and 3. Ayala Group -- 15.95 percent.

The single biggest corporate issuer is Ayala Land with P 109.65 billion or 8.63 percent.

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